Don’t Cry Over Spilled Silk Soy Milk

 

Ed Note: this post has been modified since it was first published

Whole Foods Market recently dropped Silk soy milk from many of its stores due to Silk’s shift away from primarily sourcing organic soybeans.   Silk continues to have an organic line, just not exclusively organic.  It recently added a “natural” line.  Did Whole Foods go too far in pulling Silk or was Whole Foods acting in their customers best interests?  Why did Silk revert to non-organic soy beans? Can Silk survive in the marketplace after being pulled from a nationwide grocer?


Ceasing to carry Silk soy milk is consistent with Whole Foods’ values. Whole Foods tag line reads, “selling the highest quality natural and organic products.”  Furthermore, the company has taken actions to stand behind their motto of natural and organic.

In 2009, Whole Foods became a certified organic grocer.  Earlier this year, it asked personal care product suppliers to prove their organic claims.  And most recently, Whole Foods started color coding its fish, delineating responsibly sourced versus depleted fish supplies.  Whole Foods actions meets its words.  Its customers rely on Whole Foods to provide quality, and the company continually works towards that goal.

Silk’s shift away from organic soy beans is quite shocking at first.  It appeared to be one of those brands you could trust.  However, in order to understand Silk’s predicament, we need to examine the brands ownership structure and each company’s values.  Silk is produced by WhiteWave Foods, a subsidiary of Dean Foods.

WhiteWave’s mission is “to become earth’s favorite food company,” implying earth friendly and sustainable sourcing.  Furthermore, on WhiteWave’s FAQ, their position on organic farming reads: “We believe that a corporation is most successful when it conducts business with an eye toward the greater good of society. Support for organic agriculture and small family farms is a key element of our responsible livelihood commitment.”  But, if organic agriculture is a “key element” why did WhiteWave drop the use of organic soy beans in Silk?  Perhaps peering into its parent company, Dean Foods, will provide insight.

Dean Foods has been around since 1925, and like Whole Foods, is a component of the S&P 500.  If we examine what motivates Dean Foods, the company website states, “We’re in the growth business.”  It appears the companies main focus is growth and ever increasing market share, rather than earth friendly foods like WhiteWave, or quality products like Whole Foods.

Dean Foods primary business revolved around dairy products.  So, it is no surprise that Dean Foods acquired Silk via WhiteWave as a dairy/milk alternative, in 2002.  This is consistent with its dedicated mission for growth.  However, could the action of not being exclusive to organic soybeans put a dent in Silk’s 70% soy milk marketshare?  Could other grocers or restaurants follow suit by not carrying the Silk product?

The Silk brand is in a quandary.  WhiteWave appears well versed in the language and perhaps even the culture of sustainability.  Yet, its parent company Dean Foods, appears willing to put growth ahead of any other aspect of the company.  Perhaps Whole Foods halting Silk will hint to WhiteWave and ultimately to Dean Foods that organics are becoming more and more relevant and desirable.  If Silk can stand true to WhiteWaves values, it may be able to redeem itself in the marketplace.

Jonathan Mariano is an MBA candidate with the Presidio Graduate School in San Francisco, CA. His interests include the convergence between lean & green and pursuing free-market based sustainable solutions.